<PAGE> 1
As Filed with the Securities Registration No.333-_____
and Exchange Commission on
November 25, 1996.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------
F O R M S - 8
REGISTRATION STATEMENT
Under the Securities Act of 1933
The Exploration Company
-----------------------------------------------------------------
(Exact name of issuer as specified in its charter)
Colorado 84-0793089
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
500 North Loop 1604 East, Suite 250, San Antonio, Texas 78232
- --------------------------------------------------------------------------------
(Address of Principal Executive Office) (Zip Code)
1995 Flexible Incentive Plan
- --------------------------------------------------------------------------------
(Full title of the Plan)
James E. Sigmon
500 North Loop 1604 East, Suite 250, San Antonio, Texas 78232
- --------------------------------------------------------------------------------
(Name and address of agent for service)
(210) 496-5300
- --------------------------------------------------------------------------------
(Telephone number, including area code, of agent for service)
Calculation of Registration Fee
================================================================================
Proposed
Title of Proposed maximum
securities Amount maximum aggregate Amount of
to be to be offering price offering registration
registered registered per unit price fee
- --------------------------------------------------------------------------------
Common Stock
$.01 par value (1) $400,000 (2) $2.38 (2) $952,000 (2) $288.48
- --------------------------------------------------------------------------------
(1) This Registration Statement also covers such additional number of shares,
presently undeterminable, as may become issuable under the Plan in the event of
Common Stock dividends, Common Stock splits, mergers, reorganizations, split-
ups, combinations, recapitalizations or other changes in Common Stock.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h).
<PAGE> 2
PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information
Omitted pursuant to Rule 424 promulgated by the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act of 1934,
as amended (the "1934 Act").
Item 2. Registrant Information and Employee Plan Annual Information
Omitted pursuant to Rule 424 promulgated by the Commission pursuant to
the 1934 Act.
I-1
<PAGE> 3
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed by The Exploration Company (hereinafter
the "Company" or the "Registrant") with the Commission are incorporated in and
made a part of this Registration Statement by reference: Item 2, "Description
of Registrant's Securities to be Registered," on Form 8-A dated February 1,
1980; Annual Report on Form 10-K for the fiscal year ended August 31, 1995;
Quarterly Report on Form 10-Q for the quarter ended November 30, 1995;
Quarterly Report on Form 10-Q for the quarter ended February 29, 1996;
Quarterly Report on Form 10-Q for the quarter ended May 31, 1996; and Current
Report on Form 8-K dated May 31, 1996; and Current Report on Form 8-K dated
September 4, 1996.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14, and 15(d) of the 1934 Act after the date of this Registration
Statement, and prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part thereof from the date
of the filing of such documents.
Item 4. Description of Securities
Non-applicable.
Item 5. Interests of Named Experts and Counsel
Non-applicable.
Item 6. Indemnification of Directors and Officers
The Company shall indemnify its directors, officers, employees and
agents to the fullest extent permitted by the Colorado Business Corporation Act
and its Certificate of Incorporation.
The Company's Certificate of Incorporation eliminates liability of the
Company's directors for monetary damages for breaches of their fiduciary duty
as a director, except for liability (i) for any breach of the director's duty
of loyalty to the Company or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 403 of the Colorado Business Corporation Act, as the
same exists or hereafter may be amended, or (iv) for any transaction from which
the director derived an improper personal benefit. If the Colorado Business
Corporation Act hereafter is amended to authorize the further elimination or
limitation on personal liability of directors, then the liability of a director
of the Company, in addition to the limitation on
II-1
<PAGE> 4
personal liability provided herein, shall be limited to the fullest extent
permitted by the amended Colorado Business Corporation Act. Any repeal or
modification of this paragraph by the stockholders of the Company shall be
prospective only, and shall not adversely affect any limitation on the personal
liability of a director of the Company existing at the time of such repeal or
modification.
The Company may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the Company or another
corporation, partnership, joint venture, trust or other enterprise against any
such expense, liability or loss, whether or not the Company would have the
power to indemnify such person against such expense, liability or loss under
the Colorado Business Corporation Act Law.
Item 7. Exemption from Registration Claimed
Non-applicable.
Item 8. Exhibits
<TABLE>
<S> <C>
4.1 The Company's Certificate of Incorporation.
4.2 The Company's Bylaws.
4.3 The 1995 Flexible Incentive Plan.
5.1 Opinion of Small, Craig & Werkenthin, P.C.
23.1 Consent of Akin, Doherty, Klein & Fuege, P.C.
23.2 Consent of Small, Craig & Werkenthin, P.C., is included in their opinion filed as Exhibit 5.1 of
this Registration Statement.
- ------------------------
</TABLE>
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the "1933 Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represents a fundamental change
in the information set forth in the registration statement;
II-2
<PAGE> 5
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) above do not apply if the registration statement is on
Form S-3 or Form S-8 and the information required to be included
in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registration pursuant to Section 13
or Section 15(d) of the 1934 Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the 1933 Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the 1934 Act) that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) The undersigned Registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each employee to whom the prospectus is
sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14(a)-3 or Rule 14(c)-3 under the 1934 Act;
and, where interim financial information required to be presented by Article 3
of Regulation S-X are not set forth in the prospectus, to deliver, or cause to
be delivered to each person to whom the prospectus is sooner given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing
II-3
<PAGE> 6
provisions, or otherwise, the Registrant has been advised that in the opinion
of the Commission such indemnification is against public policy as expressed in
the 1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by director, officer or controlling
person of the Registrant the successful defense of any action, suit or
proceeding) as asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel, the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against the public policy as expressed in
the 1933 Act and will be governed by the final adjudication of such issue.
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Antonio, State of Texas, on
November 7, 1996.
REGISTRANT:
THE EXPLORATION COMPANY
By: /s/ James E. Sigmon
----------------------------
Name: James E. Sigmon
--------------------------
Title: President
-------------------------
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
11-8-96 /s/ Stephen M. Gose, Jr.
- ------------ -------------------------------
Date Stephen M. Gose, Jr., Chairman
of the Board
II-4
<PAGE> 7
11-7-96 /s/ James E. Sigmon
- ------------ -------------------------------
Date James E. Sigmon, President and
Director
11-7-96 /s/ Thomas H. Gose
- ------------ -------------------------------
Date Thomas H. Gose, Secretary and
Director
11-7-96 /s/ Roberto R. Thomae
- ------------ -------------------------------
Date Roberto R. Thomae, Principal
Financial Officer, Controller or
Principal Accounting Officer
II-5
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
4.1 The Company's Certificate of Incorporation.
4.2 The Company's Bylaws.
4.3 The 1995 Flexible Incentive Plan.
5.1 Opinion of Small, Craig & Werkenthin, P.C.
23.1 Consent of Akin, Doherty, Klein & Fuege, P.C.
23.2 Consent of Small, Craig & Werkenthin, P.C., is included in
their opinion filed as Exhibit 5.1 of this Registration
Statement.
</TABLE>
<PAGE> 1
EXHIBIT 4.1
ARTICLES OF INCORPORATION
OF
THE EXPLORATION COMPANY
The undersigned natural person, being more than eighteen years of age,
hereby establishes a corporation pursuant to the statutes of Colorado and
adopts the following articles of incorporation:
FIRST: The name of the corporation is The Exploration Company.
SECOND: The corporation shall have perpetual existence.
THIRD: (a) The purpose for which the corporation is organized shall
be the transaction of any and all lawful business for which corporations may be
incorporated under the laws of Colorado.
(b) The corporation shall have and may exercise all of the
rights, powers and privileges now or hereafter conferred upon corporations
organized under the laws of Colorado and may do everything necessary, suitable
or proper for the accomplishment of any of its corporate purposes.
FOURTH: (a) The aggregate number of shares which the corporation shall
have authority to issue is 20,000,000 shares of common stock, each having a par
value of $.01.
(b) Each shareholder of record shall have one vote for each
share of stock standing in his name on the books of the corporation and
entitled to vote, except that in the election of directors he shall have the
right to vote such number of shares for as many persons as there are directors
to be elected. Cumulative
<PAGE> 2
voting shall not be allowed in the election of directors or for any other
purpose.
(c) At all meetings of shareholders, one-third of the shares
entitled to vote at such meeting represented in person or by proxy, shall
constitute a quorum, and at any meeting at which a quorum is present the
affirmative vote of a majority of the shares represented at such meeting and
entitled to vote on the subject matter shall be the act of the shareholders;
except that the following actions shall require the affirmative vote or
concurrence of a majority of all of the outstanding shares of the corporation
entitled to vote thereon: (1) adopting an amendment or amendments to these
articles of incorporation, (2) lending money to, guaranteeing the obligations
of or otherwise assisting any of the directors of the corporation, (3)
authorizing the sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the corporation, with or
without its goodwill, not in the usual and regular course of business, (4)
approving a plan of merger or consolidation, (5) adopting a resolution
submitted by the board of directors to dissolve the corporation, and (6)
adopting a resolution submitted by the board of directors to revoke voluntary
dissolution proceedings.
(d) No shareholder of the corporation shall have any
pre-emptive or similar right to acquire or subscribe for any additional
unissued or treasury shares of stock, or other securities of any class, or
rights, warrants or options to purchase stock or scrip, or securities of any
kind convertible into stock or
2
<PAGE> 3
carrying stock purchase warrants or privileges.
(e) The board of directors may from time to time distribute to
the shareholders in partial liquidation, out of either stated capital or
capital surplus of the corporation, a portion of its assets, in cash or
property, subject to the limitations contained in the statutes of Colorado.
FIFTH: The corporation shall have the right to indemnify any person
to the fullest extent allowed by the laws of Colorado, except as limited by the
bylaws of the corporation from time to time in effect.
SIXTH: Three directors shall constitute the initial board and the
names and addresses of the persons who are to serve as directors until the
first annual meeting of shareholders or until their successors are elected and
have qualified are
Edward A. Kearney 5777 South Shasta Circle
Littleton, Colorado 80123
Jerry D. Armstrong Suite 3300
555-17th Street
Denver, Colorado 80202
H. K. Keesee Suite 400
5407 North Interstate 35
Austin, Texas 78723
SEVENTH: The address of the initial registered office of the
corporation is Suite 2010, Energy Center One, 717-17th Street, Denver, Colorado
80202. The name of its initial registered agent at such address is Edward A.
Kearney.
3
<PAGE> 4
EIGHTH: The name and address of the incorporator is
Nancy Andreas
1700 Broadway, Suite 1800
Denver, Colorado 80290
Dated: May 14, 1979 /s/ Nancy Andreas
----------------------
VERIFICATION
STATE OF COLORADO )
)
CITY AND COUNTY OF DENVER )
I, Mary Kay Rohrer, a notary public, hereby certify that on the 14th
day of May, 1979, personally appeared before me NANCY ANDREAS, who being by me
first duly sworn declared that she was the person who signed the foregoing
document as incorporator and that the statements therein contained are true.
/s/ Mary Kay Rohrer
-------------------
Notary Public
My commission expires: 12/9/81
4
<PAGE> 5
EXHIBIT 4.1 (CONT.)
MAIL TO:
COLORADO SECRETARY OF STATE
CORPORATIONS OFFICE
1575 SHERMAN ST., 2ND FLOOR
DENVER, COLORADO 80203
(303) 866-2361
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is (NOTE 3) THE EXPLORATION
COMPANY.
SECOND: The following amendment was adopted by the shareholders of
the corporation on July 8, 1983, in the manner prescribed by the Colorado
Corporation Code:
Paragraph (a) of Article FOURTH of the Articles of
Incorporation is amended to read as follows:
FOURTH: (a) The aggregate number of shares which the corporation
shall have the authority to issue is 50,000,000 shares of common stock, each
having a par value of $.01.
THIRD: The number of shares of the corporation outstanding at the
time of such adoption was 6,353,650, and the number of shares entitled to vote
thereon was 6,350,650.
FOURTH: The designation and number of outstanding shares of each
class entitled to vote thereon as a class were as follows:
CLASS (NOTE 1) NUMBER OF SHARES
FIFTH: The number of shares voted for such amendment was 3,415,224;
and the number of shares voted against such amendment was 84,293.
SIXTH: The number of shares of each class entitled to vote thereon as
a class voted for and against such amendment, respectively, was:
CLASS (NOTE 1) NUMBER OF SHARES VOTED
NONE FOR AGAINST
<PAGE> 6
SEVENTH: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for in
the amendment shall be effected, is as follows:
(NOTE 2)
No change
EIGHTH: The manner in which such amendment effects a change in the
amount of stated capital, and the amount of stated capital as changed by such
amendment, are as follows:
(NOTE 2)
No change
The Exploration Company
(Note 3)
By /s/
---------------------
Its President
(Note 4)
and /s/
--------------------
Its Secretary
Subscribed and sworn to before me this 27th day of July, 1984.
My commission expires 12/19/87.
/s/ Wanda England
---------------------------------
Notary Public
1700 Broadway, Denver, CO 80290
---------------------------------
Address
NOTES: 1. If inapplicable, insert "NONE."
2. If inapplicable, insert "NO CHANGE."
3. Exact corporate name of corporation adopting the
Articles of Amendment. (If this is a change of name
amendment, the name before the amendment is filed.)
4. Signatures and titles of officers signing for the
corporation.
<PAGE> 7
EXHIBIT 4.1 (CONT.)
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
THE EXPLORATION COMPANY
Pursuant to the provisions of the Colorado Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is THE EXPLORATION COMPANY.
SECOND: The following amendment of the Articles of Incorporation was
adopted by the shareholders of the corporation on April 2, 1985, in the manner
prescribed by the Colorado Corporation Act:
(INSERT AMENDMENT)
Paragraph (a) of Article FOURTH of the Articles of
Incorporation is amended to read as follows:
FOURTH: (a) The aggregate number of shares
which the corporation shall have authority to issue
is 200,000,000 shares of common stock, each having a
par value of $.01.
THIRD: The number of shares of the corporation outstanding at the
time of such adoption was 48,366,443; and the number of shares entitled to vote
thereon was 48,366,443.
FOURTH: The designation and number of outstanding shares of each
class entitled to vote thereon as class were as follows:
Number of
Class Shares
----- ---------
(Note 1)
NONE
FIFTH: The number of shares voted for such amendment was 43,699,662;
and the number of shares voted against such amendment was 104,735.
SIXTH: The number of shares of each class entitled to vote thereon as
a class voted for and against such amendment, respectively, was:
<PAGE> 8
Class Number of Shares Voted
----- ----------------------
(Note 1) For Against
--- -------
NONE
SEVENTH: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for in
the amendment shall be effected, is as follows: (Note 2)
NO CHANGE
EIGHTH: The manner in which such amendment effects a change in the
amount of stated capital, and the amount of stated capital as changed by such
amendment, are as follows: (Note 2)
NO CHANGE
Dated April 2, 1985
THE EXPLORATION COMPANY (Note 3)
By /s/ James E. Sigmon
------------------------
Its President (Note 4)
JAMES E. SIGMON
and /s/ Barry Bailey
-----------------------
Its Secretary (Note 4)
BARRY BAILEY
STATE OF TEXAS )
)
COUNTY OF BEXAR )
Before me, Rebecca M. Lee, a Notary Public in and for the said County
and State, personally appeared James E. Sigmon who acknowledged before me that
he is the President of The Exploration Company, a Colorado corporation and that
he signed the foregoing Articles of Amendment as his free and voluntary act and
deed for the uses and purposes therein set forth.
In witness whereof I have hereunto set my hand and seal this 2nd day
of April, A.D. 1985.
My Commission expires July 8, 1985
/s/ Rebecca M. Lee
----------------------
Notary Public
Notes: 1. If inapplicable, insert "None."
2. If inapplicable, insert "No change."
3. Exact corporate name of corporation adopting the Articles of
Amendment.
4. Signatures and titles of officers signing for the corporation.
<PAGE> 9
EXHIBIT 4.1 (CONT.)
MAIL TO:
COLORADO SECRETARY OF STATE
CORPORATIONS OFFICE
1560 BROADWAY, SUITE 200
DENVER, COLORADO 80202
(303) 894-2251
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendments to its
Articles of Incorporation:
FIRST: The name of the corporation is (note 1) THE EXPLORATION
COMPANY.
SECOND: The following amendment to the Articles of Incorporation was
adopted on April 6, 1990, as prescribed by the Colorado Corporation Code, in
the manner marked X below:
Such amendment was adopted by the board of directors where no
----- shares have been issued.
X Such amendment was adopted by a vote of the shareholders. The
----- number of shares voted for the amendment was sufficient for
approval.
Article FIFTH of the Article of Incorporation is amended to read as
follows:
The Corporation shall have the right to indemnify any person to the
fullest extent allowed by the laws of Colorado, except as limited by
the bylaws of the corporation from time to time in effect.
The personal liability of each director of the Company shall be
eliminated and limited to the full extent permitted by the laws of the
State of Colorado including without limitation as permitted by the
provisions of Section 7-3-10(1)(u) of the Colorado Corporation Code
(Title 7 of the Colorado Revised Statutes) and any successor
provision, as amended.
THIRD: The manner, if not set forth in such amendment, in which any
exchange, reclassification or cancellation of issued shares provided for in the
amendment shall be effected, is as follows:
No Change
<PAGE> 10
FOURTH: The manner in which such amendment effects a change in the
amount of stated capital, and the amount of stated capital as changed by such
amendment, are as follows:
No Change
THE EXPLORATION COMPANY (Note 1)
By /s/ James E. Sigmon
-----------------------
Its President
and /s/ Barry D. Bailey
----------------------
Its Secretary (Note 2)
/s/ James E. Sigmon
----------------------
Its Director (Note 3)
NOTES: 1. Exact corporate name of corporation adopting the
Articles of Amendments. (If this is a change of name
amendment the name before this amendment is filed)
2. Signatures and titles of officers signing for the
corporation.
3. Where no shares have been issued, signature of a
director.
<PAGE> 1
EXHIBIT 4.2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1. Business Offices . . . . . . . . . . . . . . . . . . . 3
Section 2. Registered Office . . . . . . . . . . . . . . . . . . . 3
ARTICLE II. Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1. Annual Meeting . . . . . . . . . . . . . . . . . . . . 3
Section 2. Special Meeting . . . . . . . . . . . . . . . . . . . 3
Section 3. Place of Meeting . . . . . . . . . . . . . . . . . . . 4
Section 4. Notice of Meeting . . . . . . . . . . . . . . . . . . 4
Section 5. Closing of Transfer Books or
Fixing of Record Date . . . . . . . . . . . . . 4
Section 6. Voting Record . . . . . . . . . . . . . . . . . . . . 5
Section 7. Proxies . . . . . . . . . . . . . . . . . . . . . . . 5
Section 8. Quorum . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 9. Voting of Shares . . . . . . . . . . . . . . . . . . . 5
Section 10. Voting of Shares by Certain Holders . . . . . . . . . 6
Section 11. Conduct of Meetings . . . . . . . . . . . . . . . . . 6
ARTICLE III. Board of Directors . . . . . . . . . . . . . . . . . . . . . . 7
Section 1. General Powers . . . . . . . . . . . . . . . . . . . . 7
Section 2. Number, Tenure and Qualifications . . . . . . . . . . 7
Section 3. Vacancies . . . . . . . . . . . . . . . . . . . . . . 7
Section 4. Regular Meetings . . . . . . . . . . . . . . . . . . . 8
Section 5. Special Meetings . . . . . . . . . . . . . . . . . . . 8
Section 6. Notice . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 7. Presumption of Assent . . . . . . . . . . . . . . . . 8
Section 8. Quorum and Voting . . . . . . . . . . . . . . . . . . 9
Section 9. Compensation . . . . . . . . . . . . . . . . . . . . . 9
Section 10. Executive and Other Committees . . . . . . . . . . . . 9
Section 11. Meetings by Telephone . . . . . . . . . . . . . . . . 9
Section 12. Action Without a Meeting . . . . . . . . . . . . . . . 9
ARTICLE IV. Officers and Agents . . . . . . . . . . . . . . . . . . . . . . 10
Section 1. Number and Qualifications . . . . . . . . . . . . . . 10
Section 2. Election and Term of Office . . . . . . . . . . . . . 10
Section 3. Salaries . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Removal . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5. Vacancies . . . . . . . . . . . . . . . . . . . . . . 10
Section 6. Authority and Duties of Officers . . . . . . . . . . . 10
(a) Chairman of the Board . . . . . . . . . . . . . . 11
(b) President . . . . . . . . . . . . . . . . . . . . 11
(c) Vice-Presidents . . . . . . . . . . . . . . . . . 11
(d) Secretary . . . . . . . . . . . . . . . . . . . . 11
(e) Treasurer . . . . . . . . . . . . . . . . . . . . 11
ARTICLE V. Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1. Issuance of Shares . . . . . . . . . . . . . . . . . . 12
Section 2. Certificates . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Section 3. Consideration for Shares . . . . . . . . . . . . . . . 12
Section 4. Lost Certificates . . . . . . . . . . . . . . . . . . 13
Section 5. Transfer of Shares . . . . . . . . . . . . . . . . . . 13
Section 6. Holders of Record . . . . . . . . . . . . . . . . . . 13
Section 7. Transfer Agents, Registrars
and Paying Agents . . . . . . . . . . . . . . . 13
ARTICLE VI. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . 13
(a) Action . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Derivative Action . . . . . . . . . . . . . . . . . . 14
(c) Third Party Action . . . . . . . . . . . . . . . . . . 14
(d) Indemnified Party . . . . . . . . . . . . . . . . . . 14
Section 2. Third Party Actions . . . . . . . . . . . . . . . . . 14
Section 3. Derivative Actions . . . . . . . . . . . . . . . . . . 14
Section 4. Success on Merits or Otherwise . . . . . . . . . . . . 15
Section 5. Determination . . . . . . . . . . . . . . . . . . . . 15
Section 6. Payment in Advance . . . . . . . . . . . . . . . . . . 15
Section 7. Other Indemnification . . . . . . . . . . . . . . . . 15
Section 8. Period of Indemnification . . . . . . . . . . . . . . 16
Section 9. Insurance . . . . . . . . . . . . . . . . . . . . . . 16
Section 10. Right to Impose Conditions to
Indemnification . . . . . . . . . . . . . . . . 16
ARTICLE VII. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 1. Waivers of Notice . . . . . . . . . . . . . . . . . . 17
Section 2. Voting of Securities by the Corporation . . . . . . . 17
Section 3. Seal . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4. Fiscal Year . . . . . . . . . . . . . . . . . . . . . 17
Section 5. Amendments . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
<PAGE> 3
BYLAWS
OF
THE EXPLORATION COMPANY
ARTICLE I.
Offices
Section 1. Business Offices. The principal office of the corporation
shall be maintained in any location selected by the Board of Directors. The
corporation may have such other offices, either within or outside Colorado, as
the board of directors may designate or as the business of the corporation may
require from time to time.
Section 2. Registered Office. The registered office of the
corporation required by the Colorado Corporation Code to be maintained in
Colorado may be, but need not be, identical with the principal office if in
Colorado, and the address of the registered office may be changed from time to
time by the board of directors.
ARTICLE II.
Shareholders
Section 1. Annual Meeting. An annual meeting of the shareholders
shall be held on such date as may be determined by the board of directors for
the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the election of directors shall
not be held on the day designated by the Board of Directors for any annual
meeting of the shareholders, or at any adjournment thereof, the board of
directors shall cause the election to be held at a meeting of the shareholders
as soon thereafter as conveniently may be held. Failure to hold an annual
meeting as required by these bylaws shall not invalidate any action taken by
the board of directors or officers of the corporation.
Section 2. Special Meeting. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the chairman of the board, the president or the board of directors, and
shall be called by the president at the request of the holders of not less than
one-tenth of all the outstanding shares of the corporation entitled to vote at
the meeting. Business transacted at special meetings shall be confined to the
purposes stated in the notice of the meeting.
<PAGE> 4
Section 3. Place of Meeting. Each meeting of the shareholders shall
be held at such place, either within or outside Colorado, as may be designated
in the notice of meeting, or, if no place is designated in the notice, at the
principal office of the corporation.
Section 4. Notice of Meeting. Except as otherwise prescribed by
statute, written notice of each meeting of the shareholders stating the place,
day and hour of the meeting, and, in the case of a special meeting, the purpose
or purposes for which the meeting is called, shall be given not less than ten
nor more than fifty days before the date of the meeting, either personally or
by mail, by or at the direction of the chairman of the board, the president, or
the secretary, or the officer or person calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be given when deposited in the United States mail, addressed
to each shareholder at his or her address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid, but if three successive
notices mailed to the last-known address of any shareholder of record are
returned as undeliverable, no further notices to such shareholder shall be
necessary until another address for such shareholder is made known to the
corporation. If requested by a person or persons, other than the corporation,
lawfully calling a meeting, the secretary shall give notice of such meeting at
corporate expense.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of the shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the board of
directors may provide that the stock transfer books shall be closed for any
stated period not exceeding fifty days. If the stock transfer books shall be
closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of the shareholders, such books shall be closed for at least
ten days immediately preceding such meeting. In lieu of closing the stock
transfer books the board of directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be
not more than fifty days, and, in the case of a meeting of the shareholders,
not less than ten days prior to the date on which the particular action,
requiring such determination of shareholders, is to be taken. If the stock
transfer books are not closed and no record date is fixed for the determination
of shareholders entitled to notice of or to vote at a meeting of the
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of
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<PAGE> 5
shareholders entitled to vote at any meeting of the shareholders has been made
as provided in this section, such determination shall apply to any adjournment
thereof except where the determination has been made through the closing of the
stock transfer books and the stated period of the closing has expired.
Section 6. Voting Record. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at least ten
days before each meeting of the shareholders, a complete record of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each. For a period of ten days before such meeting, this record shall
be kept on file at the principal office of the corporation, whether within or
outside Colorado, and shall be subject to inspection by any shareholder for any
purpose germane to the meeting at any time during usual business hours. Such
record shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder for any
purpose germane to the meeting during the whole time of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such record or transfer books or to vote at
any meeting of the shareholders.
Section 7. Proxies. At each meeting of the shareholders, a
shareholder may vote by proxy executed in writing by the shareholder or his or
her duly authorized attorney in fact. Such proxy shall be filed with the
secretary of the corporation before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
Section 8. Quorum. Except as otherwise required by the laws of
Colorado or the articles of incorporation, a majority of the outstanding shares
of the corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at each meeting of the shareholders, and the affirmative
vote of a majority of the shares represented at a meeting at which a quorum is
present and entitled to vote on the subject matter shall be the act of the
shareholders. If less than a majority of the outstanding shares are
represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time for a period not to exceed sixty days at any one
adjournment without further notice other than an announcement at the meeting.
At such adjourned meeting, at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally notified.
Section 9. Voting of Shares. Each outstanding share of record,
regardless of class, is entitled to one vote, and each fractional share is
entitled to a corresponding fractional vote, on each matter submitted to a vote
of the shareholders either at a
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meeting thereof or pursuant to Section 11 of this Article, except to the extent
that the voting rights of the shares of any class or classes are limited or
denied by the articles of incorporation as permitted by the Colorado
Corporation Code. In the election of directors each record holder of stock
entitled to vote at such election shall have the right to vote the number of
shares owned by him for as many persons as there are directors to be elected,
and for whose election he or she has the right to vote. Cumulative voting
shall not be allowed.
Section 10. Voting of Shares by Certain Holders. Neither treasury
shares nor shares held by another corporation if a majority of the shares
entitled to vote for the election of directors of such other corporation is
held by this corporation, shall be voted at any meeting or counted in
determining the total number of outstanding shares at any given time.
Shares standing in the name of another corporation may be voted by
such officer, agent or proxy as the bylaws of such corporation may prescribe
or, in the absence of such provision, as the board of directors of such
corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by it, either in person or by proxy, without a transfer of such shares
into its name. Shares standing in the name of a trustee may be voted by it,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by it without a transfer of such shares into its name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into its name if authority so to do
is contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Section 11. Conduct of Meetings. The chairman of the annual or any
special meeting of the shareholders shall be the chairman of the board of the
corporation (or in his or her absence, the president or any person designated
by the board of directors), unless and until a different person is elected by a
majority of the shares entitled to vote at such meeting.
Meetings of shareholders shall be conducted in accordance with the
following rules:
(a) The chairman of the meeting shall have absolute authority over
matters of procedure and there shall be no appeal from the
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ruling of the chairman.
(b) If disorder should arise which prevents continuation of the
legitimate business of the meeting, the chairman may quit the chair and
announce the adjournment of the meeting; and upon his or her so doing, the
meeting is immediately adjourned.
(c) The chairman may ask or require that anyone not a bona fide
shareholder or proxy leave the meeting.
(d) A resolution or motion shall be considered for vote only if
proposed by a shareholder or a duly authorized proxy and seconded by an
individual, who is a shareholder or a duly authorized proxy, other than the
individual who proposed the resolution or motion.
ARTICLE III.
Board of Directors
Section 1. General Powers. The business and affairs of the
corporation shall be managed by its board of directors, except as otherwise
provided in the Colorado Corporation Code, the articles of incorporation or
these bylaws.
Section 2. Number, Tenure and Qualifications. The number of directors
of the Corporation shall be not less than three (3) nor more than ten (10) as
fixed by the Board of Directors. The number of directors may be increased or
decreased from time to time by resolution of the Board of Directors, but no
decrease shall have the effect of reducing the term of any incumbent director.
Directors shall be elected at the annual meetings of the shareholders, except
as provided in Section 3 of this Article, and each Director shall hold office
until his or her successor is elected and qualified, or until his or her
earlier death, resignation or removal. Directors need not be shareholders of
the Corporation or residents of the State of Colorado, but they must be
eighteen (18) years of age.
Section 3. Vacancies. Any director may resign at any time by giving
written notice- to the chairman of the board, the president or to the secretary
of the corporation. A director's resignation shall take effect at the time
specified in such notice; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Any vacancy occurring in the board of directors may be filled by the
affirmative vote of a majority of the remaining directors though less than a
quorum. A director elected to fill a vacancy shall be elected for the
unexpired term of his or her predecessor in office. Any directorship to be
filled by reason of an increase in the number of directors shall be filled by
the affirmative vote of a majority of the directors then in office or by an
election at a meeting of the
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<PAGE> 8
shareholders called for that purpose, and a director so chosen shall hold
office for the term specified in Section 2 above.
Section 4. Regular Meetings. A regular meeting of the board of
directors shall be held immediately after and at the same place as the annual
meeting of the shareholders, or as soon as practicable thereafter at the time
and place, either within or outside Colorado, determined by the board, for the
transaction of such business as may come before the meeting. The board of
directors may provide by resolution the time and place, either within or
outside Colorado, for the holding of additional regular meetings.
Section 5. Special Meetings. Special meetings of the board of
directors may be called by or at the request of the chairman of the board, the
president or any two directors. The person or persons authorized to call
special meetings of the board of directors may fix any place as the place,
either within or outside Colorado, for holding any special meeting of the board
called by them.
Section 6. Notice. Notice of each meeting of the board of directors
stating the Place, day and hour of the meeting shall be given to each director
at least two days prior thereto by the mailing of written notice, or at least
two days prior thereto by personal delivery of written notice or by telephonic
or telegraphic notice, except that in the case of a meeting to be held pursuant
to Section 11 of this Article telephone notice may be given one day prior
thereto. (The method of notice need not be the same to each director.) Notice
shall be deemed to be given, if mailed, when deposited in the United States
mail, with postage thereon prepaid, addressed to the director at his or her
business or residence address; if personally delivered, when delivered to the
director; if telegraphed, when the telegram is delivered to the telegraph
company; if telephoned, when communicated to the director. Any director may
waive notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends
a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any meeting of the board of
directors need be specified in the notice or waiver of notice of such meeting
unless otherwise required by statute.
Section 7. Presumption of Assent. A director of the corporation who
is present at a meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his or her dissent shall be entered in the minutes of the meeting
or unless he or she shall file his or her written dissent to such action with
the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the secretary of
the corporation immediately after the
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<PAGE> 9
adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
Section 8. Quorum and Voting. A majority of the number of directors
present in person shall constitute a quorum for the transaction of business at
any meeting of the board of directors, and the vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the board of directors. If less than such majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice other than an announcement at the meeting, until a
quorum shall be present. No director may vote or act by proxy at any meeting
of directors.
Section 9. Compensation. By resolution of the board of directors, any
director may be paid any one or more of the following: his or her expenses, if
any, of attendance at meetings; a fixed sum for attendance at such meeting;
stock options for shares of common stock of the corporation; or a stated salary
as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 10. Executive and Other Committees. By one or more
resolutions, the board of directors may designate from among its members an
executive committee and one or more other committees, each of which, to the
extent provided in the resolution establishing such committee, shall have and
may exercise all of the authority of the board of directors, except as
prohibited by statute. The delegation of authority to any committee shall not
operate to relieve the board of directors or any member of the board from any
responsibility imposed by law. Rules governing procedures for meetings of any
committee of the board shall be as established by the committee, or in the
absence thereof by the board of directors.
Section 11. Meetings by Telephone. Unless otherwise provided by the
articles of incorporation, members of the board of directors or any committee
thereof may participate in a meeting of the board or committee by means of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other at the same time. Such
participation shall constitute presence in person at the meeting.
Section 12. Action Without a Meeting. Any action required or
permitted to be taken at a meeting of the directors or any committee thereof
may be taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the directors or committee members
entitled to vote with respect to the subject matter thereof. Such consent
(which may be signed in counterparts) shall have the same force and effect as a
unanimous vote of the directors or committee members, and may be
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stated as such in any articles or documents filed with the office of the
Secretary of State of Colorado under the Colorado Corporation Code, or other
governmental agency.
ARTICLE IV.
Officers and Agents
Section 1. Number and Qualifications. The officers of the corporation
shall be a chairman of the board, a president, a secretary and a treasurer.
The board of directors may also elect or appoint such other officers, assistant
officers and agents, including one or more vice chairmen, vice presidents, a
controller, assistant secretaries and assistant treasurers, as it may consider
necessary. One person may hold more than one office, except that no person may
simultaneously hold the offices of president and secretary. All officers must
be at least eighteen years old.
Section 2. Election and Term of Office. The officers of the
corporation shall be elected by the board of directors, and such election may
be held at any meeting thereof. Each officer shall hold office until his or
her successor shall have been duly elected and shall have been qualified, or
until his or her earlier death, resignation or removal.
Section 3. Salaries. The salaries of the officers shall be as fixed
from time to time by the board of directors, and no officer shall be prevented
from receiving a salary by reason of the fact that he or she is also a director
of the corporation.
Section 4. Removal. Any officer or agent may be removed by the board
of directors whenever in its judgment the best interests of the corporation
will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of
an officer or agent shall not in itself create contract rights.
Section 5. Vacancies. Any officer may resign at any time, subject to
any rights or obligations under any existing contracts between the officer and
the corporation, by giving written notice to the chairman of the board or to
the board of directors. An officer's resignation shall take effect at the time
specified in such notice; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 6. Authority and Duties of Officers. The officers of the
corporation shall have the authority and shall exercise the powers and perform
the duties specified below and as may be additionally specified by the chairman
of the board, the board of directors or these bylaws, except that in any event
each officer shall exercise such powers and perform such duties as may be
required by law:
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(a) Chairman of the Board. The chairman of the board shall,
subject to the direction and supervision of the board of directors, (i) preside
at all meetings of the corporation's shareholders and board of directors and
(ii) perform such other duties as may be assigned to him or her from time to
time by the board of directors.
(b) President. The president, subject to the direction and
supervision of the board of directors, shall (i) supervise the day-to-day
operations of the corporation; (ii) in the absence of the chairman of the
board, preside at all meetings of the shareholders and board of directors;
(iii) be the chief executive officer of the corporation and perform the duties
of and have all of the powers of and be subject to all of the restrictions upon
the chairman of the board in the event of the chairman's absence, refusal or
inability to act or during a vacancy in the office of the chairman of the
board; and (iv) perform all other duties incident to the office of president
and as from time to time may be assigned to him or her by the chairman of the
board or by the board of directors.
(c) Vice-Presidents. The vice-president, if any, (or if there is
more than one, then each vice-president) shall assist the president and shall
perform such duties as may be assigned to him or her by the president, the
chairman of the board or the board of directors. The vice-president, if there
is one (or if there is more than one, then the vice-president designated by the
board of directors, or if there by no such designation then the vice-presidents
in order of their election), shall, at the request of the president, or in his
or her absence or inability or refusal to act, perform the duties of the
president, and when so acting have all of the powers of and be subject to all
of the restrictions upon the president.
(d) Secretary. The secretary shall: (i) keep the minutes of the
proceedings of the shareholders, the board of directors and any committees of
the board,- (ii) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law; (iii) be custodian of the
corporate records and of the seal of the corporation; (iv) keep at the
corporation's registered office or principal place of business within or
outside Colorado a record containing the names and addresses of all
shareholders and the number and class of shares held by each, unless such a
record shall be kept at the office of the corporation's transfer agent or
registrar; (v) have general charge of the stock books of the corporation,
unless the corporation has a transfer agent; and (vi) in general, perform all
duties incident to the office of secretary and such other duties as from time
to time may be assigned to him or her by the chairman of the board or by the
board of directors. Assistant secretaries, if any, shall have the same duties
and powers, subject to supervision by the secretary.
(e) Treasurer. The treasurer shall: (i) be the principal
financial officer of the corporation and have the care and custody
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of all its funds, securities, evidences of indebtedness and other personal
property and deposit the same in accordance with the instructions of the board
of directors; (ii) receive and give receipts and acquittances for moneys paid
in on account of the corporation, and pay out of the funds on hand all bills,
payrolls and other just debts of the corporation of whatever nature upon
maturity; (iii) unless there is a controller, be the principal accounting
officer of the corporation and as such prescribe and maintain the methods and
systems of accounting to be followed, keep complete books and records of
account, prepare and file all local, state and federal tax returns, prescribe
and maintain an adequate system of internal audit, and prepare and furnish to
the chairman of the board and the board of directors statements of account
showing the financial position of the corporation and the results of its
operations; (iv) upon request of the board, make such reports to it as may be
required at any time; and (v) perform all other duties incident to the office
of treasurer and such other duties as from time to time may be assigned to him
or her by the chairman of the board or by the board of directors. Assistant
treasurers, if any, shall have the same powers and duties, subject to the
supervision by the treasurer.
ARTICLE V
Stock
Section 1. Issuance of Shares. The issuance or sale by the
corporation of any shares of its authorized capital stock of any class,
including treasury shares, shall be made only upon authorization by the board
of directors, except as otherwise may be provided by statute.
Section 2. Certificates. The shares of stock of the corporation shall
be represented by consecutively numbered certificates signed in the name of the
corporation by its president or a vice-president and the secretary or an
assistant secretary, and shall be sealed with the seal of the corporation, or
with a facsimile thereof. The signatures of the corporation's officers on any
certificate may also be facsimiles if the certificate is countersigned by a
transfer agent, or registered by a registrar, other than the corporation itself
or an employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he or she were such officer at the date
of its issue. Certificates of stock shall be in such form consistent with law
as shall be prescribed by the board of directors. No certificate shall be
issued until the shares represented thereby are fully paid.
Section 3. Consideration for Shares. Shares shall be issued for such
consideration expressed in dollars (but not less than the
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<PAGE> 13
par value thereof) as shall be fixed from time to time by the board of
directors. Treasury shares shall be disposed of for such consideration
expressed in dollars as may be fixed from time to time by the board. Such
consideration may consist, in whole or in part, of money, other property,
tangible or intangible, or labor or services actually performed for the
corporation, but neither promissory notes nor future services shall constitute
payment or part payment for shares.
Section 4. Lost Certificates. In case of the alleged loss,
destruction or mutilation of a certificate of stock the board of directors may
direct the issuance of a new certificate in lieu thereof upon such terms and
conditions in conformity with law as it may prescribe. The board of directors
may in its discretion require a bond, in such form and amount and with such
surety as it may determine, before issuing a new certificate.
Section 5. Transfer of Shares. Upon surrender to the corporation or
to a transfer agent of the corporation of a certificate of stock duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, and cancel the old certificate. Every such
transfer of stock shall be entered on the stock books of the corporation.
Section 6. Holders of Record. The corporation shall be entitled to
treat the holder of record of any share of stock as the holder in fact thereof,
and accordingly shall not be bound to recognize any equitable or other claim to
or interest in such share on the part of any other person whether or not it
shall have express or other notice thereof, except as may be required by the
laws of Colorado.
Section 7. Transfer Agents, Registrars and Paying Agents. The board
directors may at its discretion appoint one or more transfer agents, registrars
or agents for making payment upon any class of stock, bond, debenture or other
security of the corporation. Such agents and registrars may be located either
within or outside Colorado. They shall have such rights and duties and shall
be entitled to such compensation as may be agreed.
ARTICLE VI.
Indemnification
Section 1. Definitions. For purposes of this Article VI, the following terms
shall have the meanings set forth below:
(a) Action - Any threatened, pending or completed action, suit
or proceeding , whether civil, criminal, administrative,
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arbitrative or investigative;
(b) Derivative Action- Any Action by or in the right of the
corporation to procure a judgment in its favor;
(c) Third Party Action - Any Action other than a Derivative
Action; and
(d) Indemnified Party - Any person who is or was a party or is
threatened to be made a party to any Action by reason of the fact that he or
she is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including without limitation any employee benefit plan of the
corporation for which any such person is or was serving as trustee, plan
administrator or other fiduciary.
Section 2. Third Party Actions. The corporation shall indemnify any
Indemnified Party against expenses (including attorneys' fees), judgments,
fines, excise taxes, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with any Third Party Action if, as
determined pursuant to Section 5 below, he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal Action, had no
reasonable cause to believe his or her conduct was unlawful. The termination
of any Third Party Action by judgment, order, settlement, conviction or upon a
plea of nolo contenders or its equivalent, shall not of itself create either a
presumption that the Indemnified Party did not act in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the corporation or, with respect to any criminal Action, a
presumption that the Indemnified Party had reasonable cause to believe that his
or her conduct was unlawful.
Section 3. Derivative Actions. The corporation shall indemnify any
Indemnified Party against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of any Derivative Action if, as determined pursuant to Section 5 below, he or
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person is or has been adjudged to be liable for negligence or
misconduct in the performance of his or her duty to the corporation unless and
only to the extent that the court in which such Action was brought determines
upon application that, despite the adjudication of liability and in view of all
circumstances of the case, such Indemnified Party is fairly and reasonably
entitled to indemnification for such expenses which such court deems proper.
If any claim that may be made by or in the
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right of the corporation against any person who may seek indemnification under
this Article VI is Joined with any claim by any other party against such person
in a single Action, the claim by or in the right of the corporation (and all
expenses related thereto) shall nevertheless be deemed the subject of a
separate and distinct Derivative Action for purposes of this Article VI.
Section 4. Success on Merits or Otherwise. If and to the extent that
any Indemnified Party has been successful on the merits or otherwise in defense
of any Action referred to in Section 2 or 3 of this Article VI, or in defense
of any claim, issue, or matter therein, he or she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection therewith without the necessity of any determination that he
or she has met the applicable standards of conduct set forth in Section 2 or 3
of this Article VI.
Section 5. Determination. Except as provided in Section 4, any
indemnification under Section 2 or 3 of this Article VI (unless ordered by a
court) shall be made by the corporation only upon determination that
indemnification of the Indemnified Party is proper in the circumstances because
he or she has met the applicable standards of conduct set forth in said Section
2 or 3. Any indemnification under Section 4 of this Article VI (unless ordered
by a court) shall be made by the corporation only upon a determination by the
corporation of the extent to which the Indemnified Party has been or would have
been successful on the merits or otherwise. Any such determination shall be
made (a) by a majority vote of a quorum of the whole board of directors
consisting of directors who are not or were not parties to the subject Action
or (b) upon the request of a majority of the directors who are not or were not
parties to such Action, or if there be none, upon the request of a majority of
a quorum of the whole board of directors, by independent legal counsel (which
counsel shall not be the counsel generally employed by the corporation in
connection with its corporate affairs) in a written opinion, or (c) by the
shareholders of the corporation at a meeting called for such purpose.
Section 6. Payment in Advance. Expenses (including attorneys' fees)
or some part thereof incurred by an Indemnified Party in defending any Action,
shall be paid by the corporation in advance of the final disposition of such
Action if a determination to make such payment is made on behalf of the
corporation as provided in Section 5 of this Article VI; provided that no such
payment may be made unless the corporation shall have first received a written
undertaking by or on behalf of the Indemnified Party to repay such amount
unless it is ultimately determined that he or she is entitled to be indemnified
by the corporation as authorized in this Article VI.
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<PAGE> 16
Section 7. Other Indemnification. The indemnification provided by
this Article VI shall not be deemed exclusive of any other rights to which any
Indemnified Party or other person may be entitled under the articles of
incorporation, any agreement, bylaw (including without limitation any other or
further Section or provision of this Article VI), vote of the shareholders or
disinterested directors or otherwise, and any procedure provided for by any of
the foregoing, both as to action in his or her official capacity and as to
action in another capacity while holding such office.
Section 8. Period of Indemnification. Any indemnification pursuant to
this Article VI shall continue as to any Indemnified Party who has ceased to be
a director, officer, employee, or agent of the corporation or, at the request
of the corporation, was serving as and has since ceased to be a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust or other enterprise, including, without limitation, any employee benefit
plan of the corporation for which any such person served as trustee, plan
administrator or other fiduciary, and shall inure to the benefit of the heirs
and personal representatives of such Indemnified Party. The repeal or
amendment of this Article VI or of any Section or provision thereof which would
have the effect of limiting, qualifying or restricting any of the powers or
rights of indemnification provided or permitted in this Article VI shall not,
solely by reason of such repeal or amendment, eliminate, restrict or otherwise
affect the right or power of the corporation to indemnify any person or affect
any right of indemnification of such person, with respect to any acts or
omissions which occurred prior to such repeal or amendment.
Section 9. Insurance. By action of the board of directors,
notwithstanding any interest of the directors in such action, the corporation
may purchase and maintain insurance, in such amounts as the board may deem
appropriate, on behalf of any Indemnified Party against any liability asserted
against him or her and incurred by him or her in his or her capacity of or
arising out of his or her status as an Indemnified Party, whether or not the
corporation would have the power to indemnify him or her against such liability
under applicable provisions of law.
Section 10. Right to Impose Conditions to Indemnification. The
corporation shall have the right to impose, as conditions to any
indemnification provided or permitted in this Article VI, such reasonable
requirements and conditions as to the board of directors or shareholders may
appear appropriate in each specific case and circumstances, including but not
limited to any one or more of the following: (a) that any counsel representing
the person to be indemnified in connection with the defense or settlement of
any Action shall be counsel mutually agreeable to the person to be indemnified
and to the corporation; (b) that the corporation shall have the right, at its
option, to assume and control the defense or
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<PAGE> 17
settlement of any claim or proceeding made, initiated or threatened against the
person to be indemnified; and (c) that the corporation shall be subrogated, to
the extent of any payments made by way of indemnification, to all of the
indemnified person's right of recovery, and that the person to be indemnified
shall execute all writings and do everything necessary to assure such rights of
subrogation to the corporation.
ARTICLE VII.
Miscellaneous
Section 1. Waivers of Notice. Whenever notice is required by law, by
the articles of incorporation or by these bylaws, a waiver thereof in writing
signed by the director, shareholder or other person entitled to said notice,
whether before or after the time stated therein, or his or her appearance at
such meeting in person or (in the case of a shareholders' meeting) by proxy,
shall be equivalent to such notice.
Section 2. Voting of Securities by the Corporation. Unless otherwise
provided by resolution of the board of directors, on behalf of the corporation
the chairman of the board, the president or any vice-president shall attend in
person or by substitute appointed by him or her, or shall execute written
instruments appointing a proxy or proxies to represent the corporation at, all
meetings of the shareholders of any other corporation, association or other
entity in which the corporation holds any stock or other securities, and may
execute written waivers of notice with respect to any such meetings. At all
such meetings and otherwise, the president or any vice-president, in person or
by substitute or proxy as aforesaid, may vote the stock or other securities so
held by the corporation and may execute written consents and any other
instruments with respect to such stock or securities and may exercise any and
all rights and powers incident to the ownership of said stock or securities,
subject, however, to the instructions, if any, of the board of directors.
Section 3. Seal. The corporate seal of the corporation shall be
circular in form and shall contain the name of the corporation, the year of its
organizational and the words "Seal, Colorado".
Section 4. Fiscal Year. The fiscal year of the corporation shall be
established by the board of directors.
Section 5. Amendments. Subject to repeal or change of action of the
shareholders, the power to alter, amend or repeal these bylaws and adopt new
bylaws shall be vested in the board of directors.
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Dated: October 1, 1984
/s/ Stephen M. Gose, Jr.
-----------------------------
Stephen M. Gose, Jr.
/s/ James E. Sigmon
-----------------------------
James E. Sigmon
/s/ Stephen M. Gose, III
-----------------------------
Stephen M. Gose, III
18
<PAGE> 1
EXHIBIT 4.3
THE EXPLORATION COMPANY
1995 FLEXIBLE INCENTIVE PLAN
Section 1. PURPOSE OF THE PLAN
The purposes of The Exploration Company 1995 Flexible Incentive Plan
(the "Plan") are to promote the interests of The Exploration Company (together
with any successor thereto, the "Company") and its stockholders by enabling the
Company to attract, motivate and retain key employees by offering such key
employees performance-based stock incentives and other equity interests in the
Company and other incentive awards that recognize the creation of value for the
stockholders of the Company and promote the Company's long-term growth and
success. To achieve these purposes, eligible persons may receive stock
options, Stock Appreciation Rights, Restricted Stock, Performance Awards,
performance stock, Dividend Equivalent Rights and any other Awards, or any
combination thereof.
Section 2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set
forth below unless the content otherwise requires:
2.1 "Award" shall mean the grant of a stock
option, a Stock Appreciation Right, a Restricted Stock, a
Performance Award, performance stock, a Dividend Equivalent
Right or any other award under the Plan.
2.2 "Board" shall mean the Board of Directors of
the Company, as the same may be constituted from time to time.
2.3 "Change in Control" shall mean, after the
effective date of the Plan, (i) the occurrence of an event of
a nature that would be required to be reported in response to
Item I or Item 2 of a Form 8-K Current Report of the Company
promulgated pursuant to Sections 13 and 15(d) of the Exchange
Act; provided that, without limitation, such a Change in
Control shall be deemed to have occurred if (a) any "person",
as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under any employee benefit plan
of the Company, or any company owned, directly or indirectly,
by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of
the Company representing twenty-five percent (25%) or more of
the combined voting power of the Company's then outstanding
securities or (b) during any period of two consecutive years,
individuals who at
<PAGE> 2
the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof unless
the election by the Board or the nomination for election by
the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the two-year period
or whose election or nomination for election was previously so
approved; (ii) the stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than a merger or consolidation that would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being. converted into voting
securities of the surviving entity) more than eighty percent
(80%) of the combined voting power of the voting securities of
the surviving entity outstanding immediately after such merger
or consolidation; provided, however, that a merger or
consolidation effected to implement a reorganization or
recapitalization of the Company, or a similar transaction
(collectively, a "Reorganization"), in which no "person"
acquires more than twenty percent (20%) of the combined voting
power of the Company's then outstanding securities shall not
constitute a Change in Control of the Company; or (iii) the
stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
2.4 "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
2.5 "Committee" shall mean the Stock Option and
Compensation Committee, if such a separate committee is
appointed by the Board, or, until such time as a separate
committee is appointed, it shall mean the Board. If a
separate committee is appointed, the Committee shall meet the
applicable requirements for "disinterested administration"
within the requirements of Rule 16b-3 promulgated under the
Exchange Act and any successor thereunder promulgated during
the duration of the Plan. The Board may amend the Plan to
modify the definition of Committee within the limits of Rule
16b-3 to assure that the Plan is administered in compliance
with Rule 16b-3. Initially, the Committee will consist of not
less than three (3) members of the Board who are appointed by,
and serve at the pleasure of the Board and who are (i)
"disinterested" within the meaning of Rule 16b-3 and (ii)
"outside directors," as required under Section 162(m) of the
Code and such Treasury Regulations as may be promulgated
thereunder. The Board does not meet the applicable
requirements of Rule 16b-3.
2.6 "Common Stock" shall mean the Common Stock,
par value $.01 per share, of the Company.
2.7 "Designated Beneficiary" shall mean the
beneficiary designated by a Participant in a manner determined
by the Committee, to exercise rights of the
2
<PAGE> 3
Participant in the event of the Participant's death. In the
absence of an effective designation by a Participant the
Designated Beneficiary shall be the Participant's estate.
2.8 "Disability" shall mean permanent and total
inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental
impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period
of not less than twelve (12) months, as determined in the sole
and absolute discretion of the Committee.
2.9 "Dividend Equivalent Right" shall mean the
right of the holder thereof to receive credits based on the
cash dividends that would have been paid on the Shares
specified in an Award granting Dividend Equivalent Rights if
the Shares subject to such Award were held by the person to
whom the Award is made.
2.10 "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
2.11 "Fair Market Value" shall mean with respect
to the Shares, as of any date, (i) the last reported sales
price on any stock exchange on which the Common Stock is
traded or, if not reported on such exchange, on the composite
tape, or, in case no such sale takes place on such day, the
average of the reported closing bid and asked quotations on
such exchange; (ii) if the Common Stock is not listed on a
stock exchange or no such quotations are available, the
closing price of the Common Stock as reported by the National
Market System of the National Association of Securities
Dealers, Inc., or, if no such quotations are available, the
average of the high bid and low asked quotations in the
over-the-counter market as reported by the National Quotation
Bureau Incorporated, or similar organization; or (iii) in the
event that there shall be no public market for the Common
Stock, the fair market value of the Common Stock as determined
(which determination shall be conclusive) in good faith by the
Committee, based upon the value of the Company as a going
concern, as if such Common Stock were publicly owned stock,
but without any discount with respect to minority ownership.
2.12 "Incentive Stock Option" shall mean any stock
option awarded under the Plan which qualifies as an "Incentive
Stock Option" under Section 422 of the Code or any successor
provision.
2.13 "Non-Tandem Stock Appreciation Right" shall
mean any Stock Appreciation Right granted alone and not in
connection with an Award which is a stock option.
3
<PAGE> 4
2.14 "Non-Qualified Stock Option" shall mean any
stock option awarded under the Plan that does not qualify, as
an Incentive Stock Option.
2.15 "Option" shall mean any person who has been
granted a stock option under the Plan and who has executed a
written stock option agreement with the Company reflecting the
terms of such grant.
2.16 "Performance Award" shall mean any Award
thereunder of Shares, units or rights based upon, payable in,
or otherwise related to, Shares (including Restricted Stock),
or cash of an equivalent value, as die Committee may
determine, at the end of a specified performance period
established by the Committee.
2.17 "Plan" shall mean The Exploration Company 1995
Flexible Incentive Plan set forth herein.
2.18 "Reload Option" shall mean a stock option as
deemed in subsection 6.6(b) herein.
2.19 "Restricted Stock" shall mean any Award of
Shares under the Plan that are subject to restrictions or risk
of forfeiture.
2.20 "Retirement" shall mean termination of
employment other than discharge for cause, after age 65 or on
or before age 65 if pursuant to the terms of any retirement
plan maintained by the Company or any of its Subsidiaries in
which such person participates.
2.21 "Shares" shall mean shares of the Company's
Common Stock and any shares of capital stock or other
securities of the Company hereafter issued or issuable upon,
in respect of or in substitution or exchange for such Shares.
2.22 "Stock Appreciation Right" shall mean the
right of the holder thereof to receive an amount in cash or
Shares equal to the excess of the Fair Market Value of a Share
on the date of exercise over the Fair Market Value of a Share
on the date of the grant (or such other value as may be
specified in the agreement granting the Stock Appreciation
Right).
2.23 "Subsidiary" shall mean a subsidiary
corporation of the Company, as defined in Section 424(f) of
the Code.
2.24 "Tandem Stock Appreciation Right" shall mean
a Stock Appreciation Right granted in connection with an Award
which is a stock option.
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<PAGE> 5
Section 3. ADMINISTRATION OF THE PLAN
3.1 Committee. The Plan shall be administered
and interpreted by the Committee.
3.2 Awards. Subject to the provisions of the
Plan and directions from the Board, the Committee is
authorized to:
(a) determine the persons to whom Awards are to
be granted;
(b) determine the types and combinations of
Awards to be granted, the number of Shares to be
covered by the Award, the pricing of the Award, the
time or times when the Award shall be granted and may
be exercised, the terms, performance criteria or
other conditions, vesting periods or any restrictions
for an Award, any restrictions on Shares acquired
pursuant to the exercise of an Award and any other
terms and conditions of an Award;
(c) conclusively interpret the provisions of the
Plan;
(d) prescribe, amend and rescind rules and
regulations relating to the Plan or make individual
decisions as questions arise, or both;
(e) determine whether, to what extent and under
what circumstances to provide loans from the Company
to participants to purchase Shares subject to Awards
under the Plan, and the terms and conditions of such
loans;
(f) rely upon employees of the Company for such
clerical and recordkeeping duties as may be necessary
in connection with the administration of the Plan;
and
(g) make all other determinations and take all
other actions necessary or advisable for the
administration of the Plan.
3.3 Procedures. A majority of the Committee
members shall constitute a quorum. All determinations of the
Committee shall be made by a majority of its members. All
questions of interpretation and application of the Plan or
pertaining to any question of fact or Award granted thereunder
shall be decided by the Committee, whose decision shall be
final, conclusive and binding upon the Company and each other
affected party.
Section 4. SHARES SUBJECT TO PLAN
4.1 Limitations. The maximum number of Shares that may
be issued with respect to Awards under the Plan shall not exceed
400,000 unless such maximum shall
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<PAGE> 6
be increased or decreased by reason of changes in capitalization of
the Company as hereinafter provided. The Shares issued pursuant to
the Plan may be authorized but unissued Shares, or may be issued
Shares which have been reacquired by the Company.
4.2 Changes. To the extent that any Award under the
Plan, or any stock option or performance award granted under any prior
incentive plan of the Company, shall be forfeited, shall expire or
shall be canceled, in whole or in part then the number of Shares
covered by the Award or stock option so forfeited, expired or canceled
may again be awarded pursuant to the provisions of the Plan. In the
event that Shares are delivered to the Company in full or partial
payment of the exercise price for the exercise of a stock option
granted under the Plan or any prior incentive plan of the Company, the
number of Shares available for future Awards under the Plan shall be
reduced only by the net number of Shares issued upon the exercise of
the option. Awards that may be satisfied either by the issuance of
Shares or by cash or other consideration shall, until the form of
consideration to be paid is finally determined, be counted against the
maximum number of Shares that may be issued under the Plan. If the
Award is ultimately satisfied by the payment of consideration other
than Shares, as, for example, a stock option granted in tandem with a
Stock Appreciation Right that is settled by a cash payment of the
stock appreciation, such Shares may again be made the subject of an
Award under the Plan. Awards will not reduce the number of Shares
that may be issued pursuant to the Plan if the settlement of the Award
will not require the issuance of Shares, as, for example, a Stock
Appreciation Right that can be satisfied only by the payment of cash.
Section 5. ELIGIBILITY
Eligibility for participation in the Plan shall be confined to those
persons who are employed by the Company, and who are officers or directors of
the Company, or who are in managerial or other key positions within the
Company. In making any determination as to persons to whom Awards shall be
granted, the type of Award, and/or the number of Shares to be covered by the
Award, the Committee shall consider the position and responsibilities of the
person, his or her importance to the Company, the duties of such person, his or
her past, present and potential contributions to the growth and success of the
Company, and such other factors as the Committee shall deem relevant in
connection with accomplishing the purposes of the Plan.
Section 6. STOCK OPTIONS
6.1 Grants. The Committee may grant stock options alone
or in addition to other Awards granted under the Plan to any eligible
officer, director or other key employee. Each person so selected
shall be offered an option to purchase the number of Shares determined
by the Committee. The Committee shall specify whether such option is
an Incentive Stock Option or Non-Qualified Stock Option and any other
terms and conditions relating to such Award. To the extent that any
stock option does not qualify as an Incentive Stock Option (whether
because of its provisions or the time or manner of its exercise or
otherwise), such stock option or the portion thereof which does not
qualify
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<PAGE> 7
shall constitute a separate Non-Qualified Stock Option. Each such
person so selected shall have a reasonable period of time within which
to accept or reject the offered option. Failure to accept within the
period so fixed by the Committee may be treated as a rejection. Each
person who accepts an option shall enter into a written agreement with
the Company, in such form as the Committee may prescribe, setting
forth the terms and conditions of the option, consistent with the
provisions of the Plan. The Option and the Company shall enter into
option agreements for Incentive Stock Options and NonQualified Stock
Options. At any time and from time to time, the Option and the
Company may agree to modify an option agreement so that an incentive
Stock Option may be converted to a Non-Qualified Stock Option.
The Committee may require that an Option meet certain conditions
before the option or a portion thereof may vest or be exercised, as, for
example, that the Option remain in the employ of the Company for a stated
period or periods of time before the option, or stated portions thereof may
vest or be exercised.
6.2 Option Price. The option exercise price of the
Shares covered by each stock option shall be determined by the
Committee; provided, however, that the option exercise price of an
Incentive Stock Option shall not be less than one hundred percent
(100%) of the Fair Market Value of Shares on the date of the grant of
such Incentive Stock Option.
6.3 Incentive Stock Options Limitations.
(a) In no event shall any person be granted
Incentive Stock Options to the extent that the Shares covered
by any Incentive Stock Options (and any incentive stock
options granted under any other plans of the Company and its
Subsidiaries) that may be exercised for the first time by such
person in any calendar year have an aggregate Fair Market
Value in excess of $100,000. For this purpose, the Fair
Market Value of the Shares shall be determined as of the dates
on which the Incentive Stock Options are granted. It is
intended that the limitation on Incentive Stock Options
provided in this subsection 6.3(a) be the maximum limitation
on options which may be considered Incentive Stock Options
under the Code.
(b) Notwithstanding anything herein to the
contrary, in no event shall any employee owning more than ten
percent (10%) of the total combined voting power of the
Company or any Subsidiary be granted an Incentive Stock Option
thereunder unless the option exercise price shall be at least
one hundred ten percent (110%) of the Fair Market Value of the
Shares subject to such Incentive Stock Option at the time that
the Incentive Stock Option is granted and the term of such
Incentive Stock Option shall not exceed five (5) years.
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<PAGE> 8
6.4 Option Term. Subject to subsection 6.3(b) hereof,
the term of a stock option shall be for such period of months or years
from the date of its grant as may be determined by the Committee;
provided, however, that no Incentive Stock Option shall be exercisable
later than ten (10) years from the date of its grant. Furthermore, no
Incentive Stock Option may be exercised unless, at the time of such
exercise, the Option is, and has been continuously since the date of
grant of his or her Incentive Stock Option, employed by the Company,
except that:
(a) An Incentive Stock Option may, to the extent
vested, be exercised within the period of three months after
the date the Participant ceases to be an employee of the
Company (or within such lesser period as may be specified in
the applicable option agreement), provided that the option
agreement may designate a longer exercise period and that the
exercise after such three-month period shall be treated as the
exercise of a Non-Qualified Stock Option under the Plan;
(b) If the Option dies while in the employ of the
Company, or within three months after the Option ceases to be
such an employee, the Incentive Stock Option may, to the
extent vested, be exercised by the Optionee's Designated
Beneficiary within the period of one year after the date of
death (or within such lesser period as may be specified in the
applicable option agreement); and
(c) If the Option ceases to be an employee of the
Company by reason of the Optionee's Disability, the Incentive
Stock Option may be exercised within the period of one year
after the date of Disability (or within such lesser period as
maybe specified in the applicable option agreement).
6.5 Vesting of Stock Options.
(a) Each stock option granted thereunder may only
be exercised to the extent that the Option is vested in such
option. Each stock option shall vest separately in accordance
with the option vesting schedule, if any, determined by the
Committee in its sole discretion, which will be incorporated
in the stock option agreement entered into between the Company
and each Option. The option vesting schedule will be
accelerated if, in the sole discretion of the Committee, the
Committee determines that acceleration of the option vesting
schedule would be desirable for the Company.
(b) In the event of the dissolution or
liquidation of the Company, each stock option granted under
the Plan shall terminate as of a date to be fixed by the
Board; provided, however, that not less than thirty (30) days'
written notice of the date so fixed shall be given to each
Option and each such Option shall be fully vested in and shall
have the right during such period to exercise the option, even
though such option would not otherwise be exercisable under
the option vesting
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<PAGE> 9
schedule. At the end of such period, any unexercised option
shall terminate and be of no other effect.
(c) In the event of a Reorganization (as defined
in Section 2.3 hereof):
(1) If there is no plan or agreement
respecting the Reorganization, or if such plan or
agreement does not specifically provide for the
change, conversion or exchange of the Shares under
outstanding and unexercised stock options for other
securities thin the provisions of subsection 6.5(b)
shall apply as if the Company had dissolved or been
liquidated on the effective date of the
Reorganization; or
(2) If there is a plan or agreement
respecting the Reorganization, and if such plan or
agreement specifically provides for the change,
conversion or exchange of the Shares under
outstanding and unexercised stock options for
securities of another corporation, then the Board
shall adjust the Shares under such outstanding and
unexercised stock options (and shall adjust the
Shares remaining under the Plan which are then
available to be awarded under the Plan, if such plan
or agreement makes no specific provision therefor) in
a manner not inconsistent with the provisions of such
plan or agreement for the adjustment change,
conversion or exchange of such Shares and such
options.
(d) In the event of a Change in Control of the
Company, all stock options and any associated Stock
Appreciation Rights shall become fully vested and immediately
exercisable and the vesting of all performance-based stock
options shall be determined as if the performance period or
cycle applicable to such stock options had ended immediately
upon such Change in Control; provided, however, that if in the
opinion of counsel to the Company the immediate exercisability
of options when taken into consideration with all other
"parachute payments" as defined in Section 28OG of the Code,
as amended, would result in an "excess parachute payment" as
defined in such section as well as an exercise tax imposed by
Section 4999 of the Code, such options and any associated
Stock Appreciation Rights shall become fully vested and
immediately exercisable, except as and to the extent the
Committee, in its sole discretion, shall otherwise determine,
and which determination by the Committee shall be based solely
upon maximizing the after-tax benefits to be received by any
such Option.
6.6 Exercise of Stock Options.
(a) Stock options may be exercised as to Shares
only in amounts and at intervals of time specified in the
written option agreement between the Company and the Option.
Each exercise of a stock option, or any part thereof, shall be
evidenced by a notice in writing to the Company. The purchase
price of
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<PAGE> 10
the Shares as to which an option shall be exercised shall be
paid in full at the time of exercise, and may be paid to the
Company either:
(1) in cash (including check, bank draft
or money order); or
(2) by the delivery of Shares having a
Fair Market Value equal to the aggregate option rate;
(3) by a combination of cash and Shares;
or
(4) by other consideration deemed
acceptable by the Committee in its sole discretion.
(b) If an Option delivers Shares (including
Shares of Restricted Stock) already owned by him or her in
full or partial payment of the exercise price for any stock
option granted under the Plan or any prior incentive plan of
the Company, or if the Option elects to have the Company
reflect that number of Shares out of the Shares being acquired
through the exercise of the option having a Fair Market Value
equal to the exercise price of the stock option being
exercised, the Committee may authorize the automatic grant of
a new option (a "Reload Option") for that number of Shares as
shall equal the number of already owned Shares surrendered
(including Shares of Restricted Stock) or newly acquired
Shares being retained in payment of the option exercise price
of the underlying stock option being exercised. The grant of
a Reload Option will become effective upon the exercise of the
underlying stock option. The option exercise price of the
Reload Option shall be the Fair Market Value of a Share on the
effective date of the grant of the Reload Option. Each Reload
Option shall be exercisable no earlier than six (6) months
from the date of its grant and no later than the time when the
underlying stock option being exercised could be last
exercised. The Committee may also specify additional terms,
conditions and restrictions for the Reload Option and the
Shares to be acquired upon the exercise thereof.
(c) The amount, as determined by the Committee,
of any federal, state or local tax required to be withheld by
the Company due to the exercise of a stock option shall be
satisfied by payment by the Option to the Company of the
amount of such withholding obligation in cash or other
consideration acceptable to the Committee in its sole
discretion.
(d) An Option shall not have any of the rights of
a stockholder of the Company with respect to the Shares
covered by a stock option except to the extent that one or
more certificates representing such Shares shall have been
delivered to the Option, or the Option has been determined to
be a stockholder of record by the Company's transfer agent,
upon due exercise of the option.
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6.7 Date of a Stock Option Grant. The granting of a
stock option shall take place only upon the execution and delivery by
the Company and an optionee of an option agreement. Neither any
action taken by the Board nor anything contained in the Plan or in any
resolution adopted or to be adopted by the Board or the stockholders
of the Company shall constitute the granting of a stock option under
the Plan.
Section 7. STOCK APPRECIATION RIGHTS
7.1 Grants. The Committee may grant to any eligible
employee either Non-Tandem Stock Appreciation Rights or Tandem Stock
Appreciation Rights. Stock Appreciation Rights shall be subject to
such terms and conditions as the Committee shall impose. The grant of
the Stock Appreciation Right may provide that the holder may be paid
for the value of the Stock Appreciation Right either in cash or in
Shares, or a combination thereof, at the discretion of the Committee.
In the event of the exercise of a Stock Appreciation Right payable in
Shares, the holder of the Stock Appreciation Right shall receive that
number of whole Shares of stock of the Company having an aggregate
Fair Market Value on the date of exercise equal to the value obtained
by multiplying (i) either (a) in the case of a Tandem Stock
Appreciation Right, the difference between the Fair Market Value of a
Share on the date of exercise over the per share exercise price of the
related option, or (b) in the case of a Non-Tandem Stock Appreciation
Right the difference between the Fair Market Value of a Share on the
date of exercise over the Fair Market Value on the date of the grant
by (ii) the number of Shares as to which the Stock Appreciation Right
is exercised. However, notwithstanding the foregoing, the Committee,
in its sole discretion, may place a ceiling on the amount payable upon
exercise of a Stock Appreciation Right but any such limitation shall
be specified at the time that the Stock Appreciation Right is granted.
7.2 Exercisability. A Tandem Stock Appreciation Right
may be granted at the time of the grant of the related stock option
or, if the related stock option is a Non-Qualified Stock Option, at
any time thereafter during the term of the stock option. A Tandem
Stock Appreciation Right granted in connection with an Incentive Stock
Option (i) may be exercised at, and only at, the times and to the
extent the related Incentive Plan Stock Option is exercisable, (ii)
expires upon the termination of the related Incentive Stock Option,
(iii) may not exceed 100% of the difference between the exercise price
of the related Incentive Stock Option and the market price of the
Shares subject to the related Incentive Stock Option at the time the
Tandem Stock Appreciation Right is exercised and (iv) may be exercised
at, and only at, such times as the market price of the Shares subject
to the related Incentive Stock Option exceeds the exercise price of
the related Incentive Stock Option. The Tandem Stock Appreciation
Right may be transferred at, and only at, the times and to the extent
the related stock option is transferable. If a Tandem Stock
Appreciation Right is granted, there shall be surrendered and canceled
from the related option at the time of exercise of the Tandem Stock
Appreciation Right, in lieu of exercise under the related option, that
number of Shares as shall equal the number of Shares as to which the
Tandem Stock Appreciation Right shall have been exercised.
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7.3 Certain Limitations on Non-Tandem Stock Appreciation
Rights. A Non-Tandem Stock Appreciation Right will be exercisable as
provided by the Committee and will have such other terms and
conditions as the Committee may determine. A Non-Tandem Stock
Appreciation Right is subject to acceleration of vesting or immediate
termination in certain circumstances in the same manner as stock
options pursuant to subsections 6.4 and 6.5 of the Plan.
7.4 Limited Stock Appreciation Rights. The Committee is
also authorized to grant "limited stock appreciation rights," either
as Tandem Stock Appreciation Rights or Non-Tandem Stock Appreciation
Rights. Limited stock appreciation rights would become exercisable
only upon the occurrence of a Change in Control or such other event as
the Committee may designate at the time of grant or thereafter.
Section 8. RESTRICTED STOCK
8.1 Grants. The Committee may grant Awards of Restricted
Stock for no cash consideration, for such minimum consideration as may
be required by applicable law, or for such other consideration as may
be specified by the grant. The terms and conditions of the Restricted
Stock shall be specified by the grant agreement. The Committee, in
its sole discretion, may specify any particular rights which the
person to whom an Award of Restricted Stock is made shall have in the
Restricted Stock during the restriction period and the restrictions
applicable to the particular Award, the vesting schedule (which may be
based on service, performance or other factors) and rights to
acceleration of vesting (including, without limitation, whether
non-vested Shares are forfeited or vested upon termination of
employment). Further, the Committee may award performance-based
Restricted Stock by conditioning the grant, or vesting or such other
factors, such as the release, expiration or lapse of restrictions upon
any such Award (including the acceleration of any such conditions or
terms) of such Restricted Stock upon the attainment of specified
performance goals or such other factors as the Committee may
determine. The Committee shall also determine when the restrictions
shall lapse or expire and the conditions, if any, under which the
Restricted Stock will be forfeited or sold back to the Company. Each
Award of Restricted Stock may have different restrictions and
conditions. The Committee, in its discretion, may prospectively
change the restriction period and the restrictions applicable to any
particular Award of Restricted Stock. Unless otherwise set forth in
the Plan, Restricted Stock may not be disposed of by the recipient
until the restrictions specified in the Award expire.
8.2 Awards. and Certificates. Any Restricted Stock
issued hereunder may be evidenced such manner as the Committee, in its
sole discretion, shall deem appropriate including, without limitation,
book-entry registration or issuance of a stock certificate or
certificates. In the event any stock certificate is issued in respect
of Shares of Restricted Stock awarded hereunder, such certificate
shall bear an appropriate legend with respect to the restrictions
applicable to such Award. The Company may retain, at its option, the
physical custody of any stock certificate representing any awards of
Restricted Stock
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during the restriction period or require that the Restricted Stock be
placed in escrow or trust, along with a stock power endorsed in blank,
until all restrictions are removed or expire.
Section 9. PERFORMANCE AWARDS
9.1 Grants. A Performance Award may consist of either or
both, as the Committee may determine, of (i) "Performance Shares" or
the right to receive Shares, Restricted Stock or cash of an equivalent
value, or any combination thereof as the Committee may determine, or
(ii) "Performance Units," or the right to receive a fixed dollar
amount payable in cash, Common Stock, Restricted Stock or any
combination thereof, as the Committee may determine. The Committee
may grant Performance Awards to any eligible employee, for no cash
consideration, for such minimum consideration as may be required by
applicable law or for such other consideration as may be specified at
the time of the grant. The terms and conditions of Performance Awards
shall be specified at the time of the grant and may include provisions
establishing the performance period, the performance criteria to be
achieved during a performance period the criteria used to determine
vesting (including the acceleration thereof), whether Performance
Awards are forfeited or vest upon termination of employment during a
performance period and the maximum or minimum settlement values. Each
Performance Award shall have its own terms and conditions, which shall
be determined in the discretion of the Committee. If the Committee
determines, in its sole discretion, that the established performance
measures or objectives are no longer suitable because of a change in
the Company's business, operations, corporate structure or for other
reasons that the Committee deems satisfactory, the Committee may
modify the performance measures or objectives and/or the performance
period.
9.2 Terms and Conditions. Performance Awards may be
valued by reference to the Fair Market Value of a Share or according
to any formula or method deemed appropriate by the Committee, in its
sole discretion, including, but not limited to, achievement of
specific financial, production, sales, cost or earnings performance
objectives that the Committee believes to be relevant to the Company's
business and for remaining in the employ of the Company for a
specified period of time, or the Company's performance or the
performance of its Common Stock measured against the performance of
the market the Company's industry segment or its direct competitors.
Performance Awards may be paid in cash, Shares (including Restricted
Stock) or other consideration, or any combination thereof If payable
in Shares, the consideration for the issuance of the Shares may be the
achievement of the performance objective established at the time of
the grant of the Performance Award. Performance Awards may be payable
in a single payment or in installments and may be payable at a
specified date or dates or upon attaining the performance objective,
all at the Committee's discretion. The extent to which any applicable
performance objective has been achieved shall be conclusively
determined by the Committee.
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Section 10. DIVIDEND EQUIVALENT RIGHTS
The Committee may grant a Dividend Equivalent Right either as a
component of another Award or as a separate Award, and, in general, each such
holder of a Dividend Equivalent Right that is outstanding on a dividend record
date for the Company's Common Stock shall be credited with an amount equal to
the cash or stock dividends or other distributions that would have been
received had the Shares covered by the Award been issued and outstanding on the
dividend record date. The terms and conditions of the Dividend Equivalent
Right shall be specified by the grant. Dividend equivalents credited to the
holder of a Dividend Equivalent Right may be paid currently or may be deemed to
be reinvested in additional Shares (which may thereafter accrue additional
Dividend Equivalent Rights). Any such reinvestment shall be at the Fair Market
Value at the time thereof. Dividend Equivalent Rights may be settled in cash
or Shares, or a combination thereof, in a single payment or in installments. A
Dividend Equivalent Right granted as a component of another Award may provide
that such Dividend Equivalent Right shall be settled upon exercise, settlement
or payment for or lapse of restrictions on such other Award, and that such
Dividend Equivalent Right shall expire or be forfeited or annulled under the
same conditions as such other Award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms a conditions different from
such other Award.
Section 11. OTHER AWARDS
The Committee may grant to any eligible employee other forms of Awards
based upon, payable in or otherwise related to, in whole or in part, Shares if
the Committee, in its sole discretion, determines that such other form of Award
is consistent with the purposes and restrictions of the Plan. The terms and
conditions of such other form of Award shall be specified by the grant
including, but not limited to, the price, if any, and the vesting schedule, if
any. Such Awards may be granted for no cash consideration, for such minimum
consideration as may be required by applicable law or for such other
consideration as may be specified by the grant.
Section 12. COMPLIANCE WITH SECURITIES AND OTHER LAWS
In no event shall the Company be required to sell or issue Shares
under any Award if the sale or issuance thereof would constitute a violation of
applicable federal or state securities laws or regulations or a violation of
any other law or regulation of any governmental or regulatory agency or
authority or any national securities exchange. As a condition to any sale or
issuance of Shares, the Company may place legends on Shares, issue stop
transfer orders and require such agreements or undertakings as the Company may
deem necessary or advisable to assure compliance with any such laws or
regulations, including, if the Company or its counsel deems it appropriate,
representations from the person to whom an Award is granted that he or she is
acquiring the Shares solely for investment and not with a view to distribution
and that no distribution of the Shares will be made unless registered pursuant
to applicable federal and state securities laws, or in the opinion of counsel
of the Company, such registration is unnecessary.
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Section 13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR REORGANIZATION
The value of an Award in Shares shall be adjusted from time to time as
follows:
(a) Subject to any required action by stockholders, the
number of Shares covered by each outstanding Award, and the exercise
price, shall be proportionately adjusted for any increase or decrease
in the number of issued Shares of the Company resulting from a
subdivision or consolidation of Shares or the payment of a stock
dividend (but only in Shares) or any other increase or decrease in the
number of Shares affected without receipt of consideration by the
Company.
(b) Subject to any required action by stockholders, if
the Company shall be the surviving corporation in any Reorganization,
merger or consolidation, each outstanding Award shall pertain to and
apply to the securities to which a holder of the number of Shares
subject to the Award would have been entitled, and if a plan or
agreement reflecting any such event is in effect that specifically
provides for the change, conversion or exchange of Shares, then any
adjustment to Shares relating to an Award hereunder shall not be
inconsistent with the terms of any such plan or agreement.
(c) In the event of a change in the Shares of the Company
as presently constituted, which is limited to a change of par value
into the same number of Shares with a different par value or without
par value, the Shares resulting from any such change shall be deemed
to be the Shares within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustments shall be made by the
Board, whose determination shall be final, binding and conclusive.
Except as hereinbefore expressly provided in the Plan, any
person to whom an Award is granted shall have no rights by reason of
any subdivision or consolidation of stock of any class or the payment
of any stock dividend or any other increase or decrease in the number
of shares of stock of any class or by reason of any dissolution,
liquidation, reorganization, merger or consolidation, or spin-off of
assets or stock of another corporation, and any issue by the Company
of shares of stock of any class, or securities convertible into shares
of stock of any class, shall not affect and no adjustment by reason
thereof shall be made with respect to, the number or exercise price of
Shares subject to an Award.
The grant of an Award pursuant to the Plan shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, Reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve,
liquidate or sell or transfer all or any part of its business or
assets.
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Section 14. AMENDMENT OR TERMINATION OF THE PLAN
14.1 Amendment of the Plan. Notwithstanding anything
contained in the Plan to the contrary, all provisions of the Plan may
at any time or from time to time be modified or amended by the Board;
provided, however, that no Award at any time outstanding under the
Plan may be modified, unpaired or canceled adversely to the holder of
the Award without the consent of such holder; and provided, further,
that the Plan may not be amended without approval by the holders of a
majority of the Shares of the Company represented and voted at a
meeting of the stockholders (a) to increase the maximum number of
Shares subject to the Plan, (b) to materially modify the requirements
as to eligibility for participation in the Plan, (c) to decrease the
minimum exercise price for options, (d) to otherwise materially
increase the benefits accruing to persons to whom Awards may be made
under the Plan, as amended, or (e) if such approval is otherwise
necessary, to comply with Rule 16b-3 promulgated under the Exchange
Act as amended, or to comply with any other applicable laws,
regulations or listing requirements, or to qualify for an exemption or
characterization that is deemed desirable by the Board.
14.2 Termination of the Plan. The Board may suspend or
terminate the Plan at any time, and such suspension or termination may
be retroactive or prospective. However, no Award may be granted on or
after the tenth anniversary of the adoption of the Plan. Termination
of the Plan shall not impair or affect any Award previously granted
hereunder and the rights of the holder of the Award shall remain in
effect until the Award has been exercised in its entirety or has
expired or otherwise has been terminated by the terms of such Award.
Section 15. AMENDMENTS AND ADJUSTMENTS TO AWARDS
The Committee may amend, modify or terminate any outstanding Award
with the Participants consent at any time prior to payment or exercise in any
manner not inconsistent with the terms of the Plan, including, without
limitation, (i) to change the date or dates as of which (A) an option becomes
exercisable or (B) a performance-based Award is deemed earned, (ii) to amend
the terms of any outstanding Award to provide an exercise price per share which
is higher or lower than the then current exercise price per share of such
outstanding Award or (iii) to cancel an Award and grant a new Award in
substitution therefor under such different terms and conditions as it
determines in its sole and complete discretion to be appropriate including, but
not limited to, having an exercise price per share which may be higher or lower
than the exercise price per share of the canceled Award. The Committee is also
authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 13 hereof
affecting the Company, or the financial statements of the Company or any
Affiliate, or of changes in applicable laws, regulations or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent reduction or enlargement of the benefits or
potential benefits intended to be made available under the Plan. Any provision
of the Plan or any agreement regarding an Award to the contrary
notwithstanding, the Committee may cause any
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Award granted to be canceled in consideration of a cash payment or alternative
Award made to the holder of such canceled Award equal in value to the Fair
Market Value of such canceled Award. The determinations of value under this
Section 15 shall be made by the Committee in its sole discretion.
Section 16. GENERAL PROVISIONS
16.1 No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company from adopting or
continuing in effect other compensation arrangements, and such
arrangements may be either generally applicable or applicable only in
specific cases.
16.2 No Right to Employment. Nothing in the Plan or in
any Award, nor the grant of any Award, shall confer upon or be
construed as giving any recipient of an Award any right to remain in
the employ of the Company. Further, the Company may at any time
dismiss a participant in the Plan from employment, free from any
liability or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award agreement. No employee,
participant or other person shall have any claim to be granted any
Award, and there is no obligation for uniformity or treatment of
employees, participants or holders or beneficiaries of Awards.
16.3 GOVERNING LAW. THE VALIDITY, CONSTRUCTION AND EFFECT
OF THE PLAN AND ANY RULES AND REGULATIONS RELATING TO THE PLAN SHALL
BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
16.4 Severability. If any provision of the Plan or any
Award is or becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction or as to any person or Award, or
would disqualify the Plan or any Award under any law deemed applicable
by the Committee, such provision shall be construed or deemed amended
to conform to applicable laws, or if it cannot be construed or deemed
amended without in the sole determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, person or Award and the remainder of
the Plan and any such Award shall remain in full force and effect.
16.5 No Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash, other securities or other
property shall be paid or transferred in lieu of any fractional Shares
or whether such fractional Shares or any rights thereto shall be
canceled, terminated or otherwise eliminated.
16.6 Headings. Headings are given to the subsections of
the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way
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material or relevant to the construction or interpretation of the Plan
or any provision thereof.
16.7 Effective Date. The Plan shall be effective as of
the date of its approval by the holders of a majority of the Shares of
the Company represented and voting at the next Annual Meeting of
Stockholders. If the Plan is not approved by the stockholders at the
1994 Annual Meeting, after such date, the Plan and all Awards granted
hereunder, if any, shall be void.
16.8 Non-Transferability of Awards. Awards shall not be
transferable otherwise than by will or the laws of descent and
distribution, and Awards may be exercised, during the lifetime of the
holder, only by the holder; provided, however, that with the approval
of the Committee, Awards other than Incentive Stock Options may be
transferred as directed under a qualified domestic relations order.
Any attempted assignment, transfer, pledge, hypothecation or other
disposition of an Award contrary to the provisions hereof, or the levy
of any execution, attachment or similar process upon an Award shall be
null and void and without effect.
Section 17. NAMED EXECUTIVE OFFICERS
17.1 Applicability of Section 17. The provisions of this
Section 17 shall apply only to those executive officers (i) whose
compensation is required to be reported in the Company's proxy
statement pursuant to Item 402(a)(3)(i) and (ii) of Regulation S-K
under the general rules and regulations under the Exchange Act, as
amended, and (ii) whose total compensation, including estimated
Awards, is determined by the Committee to possibly be subject to the
limitations on deductions imposed by Section 162(m) of the Code
("Named Executive Officers"). In the event of any inconsistencies
between this Section 17 and the other Plan provisions as they pertain
to Named Executive Officers, the provisions of this Section 17 shall
control.
17.2 Establishment of Performance Goals. Awards for Named
Executive Officers, other than stock options and Stock Appreciation
Rights, shall be based on the attainment of certain performance goals.
No later than the earlier of (i) ninety (90) days after the
commencement of the applicable fiscal year or such other award period
as may be established by the Committee ("Award Period") and (ii) the
completion of twenty-five percent (25%) of such Award Period, the
Committee shall establish, in writing, the performance goals
applicable to each such Award for Named Executive Officers. At the
time the performance goals are established by the Committee, their
outcome must be substantially uncertain. In addition, the performance
goal must state, in terms of an objective formula or standard, the
method for computing the amount of compensation payable to the Named
Executive Officer if the goal is obtained. Such formula or standard
shall be sufficiently objective so that a third party with knowledge
of the relevant performance results could calculate the amount to be
paid to the subject Named Executive Officer. The material terms of
the performance goals for Named Executive Officers and
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the compensation payable thereunder shall be submitted to the
shareholders of the Company for their review and approval.
Shareholder approval shall be obtained for such performance goals
prior to any Award being paid to such Named Executive Officer. If the
shareholders do not approve such performance goals, no amount shall be
paid to such Named Executive Officer for such applicable Award Period
under the Plan. The disclosure of the "material terms" of a
performance goal and the compensation payable thereunder shall be
determined under the guidelines set forth under Section 162(m) of the
Code, and the Treasury Regulations thereunder.
17.3 Components of Awards. Each Award of a Named
Executive Officer, other than stock options and Stock Appreciation
Rights, shall be based on performance goals which are sufficiently
objective so that a third party having knowledge of the relevant facts
could determine whether the goal was met. Except as provided in
subsection 17.8 herein, performance measures which may serve as
determinants of Named Executive Officers Awards shall be limited to
the following measures: earnings per share; return on assets; return
on equity; return on capital; net profit after taxes; net profit
before taxes; economic value added; operating profits; stock price;
market share; and sales or expenses. Within ninety (90) days
following the end of each Award Period, the Committee shall certify in
writing that the performance goals, and any other material terms were
satisfied. Thereafter, Awards shall be made for each named Executive
Officer as determined by the Committee. The Awards may not vary from
the preestablished amount based on the level of achievement.
17.4 No Mid-Year Change in Awards. Except as provided in
subsections 17.8 and 17.9 herein, each Named Executive Officers Awards
shall be based exclusively on the performance measures established by
the Committee pursuant to subsection 17.2.
17.5 No Partial Award Period Participation. A Named
Executive Officer who becomes eligible to participate in the Plan
after performance goals have been established in an Award Period
pursuant to subsection 17.2 may not participation in the Plan prior to
the next succeeding Award Period, except with respect to Awards which
are stock options or Stock Appreciation Rights.
17.6 Performance Goals. Except as provided in subsection
17.8 herein, performance goals shall not be changed following their
establishment, and Named Executive Officers shall not receive any
payout, except with respect to Awards which are stock options or Stock
Appreciation Rights, when the minimum performance goals are not met or
exceeded.
17.7 Individual Performance and Discretionary Adjustments.
Except as provided in subsection 17.8 herein, subjective evaluations
of individual performance of Named Executive Officers shall not be
reflected in their Awards, other than Awards which are stock options
or Stock Appreciation Rights. The payment of such Awards shall be
entirely dependent upon the attainment of the preestablished
performance goals.
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17.8 Amendments. No amendment of the Plan with respect to
any Named Executive Officer may be made which would (i) increase the
maximum amount that can be paid to any one Participant under the Plan,
(ii) change the specified performance goal for payment of Awards, or
(iii) modify the requirements as to eligibility for participation in
the Plan, unless the Company's shareholders have first approved such
amendment in a manner which would permit the deduction under Section
162(m) of the Code of such payment in the fiscal year it is paid. The
Committee shall amend this Section 17 and such other provisions as it
deems appropriate, to cause amounts payable to Named Executive
Officers to satisfy the requirements of Section 162(m) and the
Treasury Regulations promulgated thereunder.
17.9 Stock Options and Stock Appreciation Rights.
Notwithstanding any provision of the Plan (including the provisions of
this Section 17) to the contrary, the amount of compensation which a
Named Executive Officer may receive with respect to stock options and
Stock Appreciation Rights which are granted hereunder is based solely
on an increase in the value of the applicable Shares after the date of
grant of such Award. Thus, no stock option may be granted hereunder
to a Named Executive Officer with an exercise price less than the Fair
Market Value of Shares on the date of grant. Furthermore, the maximum
number of Shares (or cash equivalent value) with respect to which
stock options or Stock Appreciation Rights may be granted hereunder to
any Named Executive Officer during any calendar year may not exceed
80,000 Shares, subject to adjustment as provided in Section 13
hereunder.
17.10 Maximum Amount of Compensation. The maximum amount
of compensation payable as an Award (other than an Award which is a
stock option or Stock Appreciation Right) to any Named Executive
Officer during any calendar year may not exceed $1,000,000.
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EXHIBIT 5.1
LAW OFFICES
Small, Craig & Werkenthin
A PROFESSIONAL CORPORATION
November 15, 1996
The Exploration Company
500 North Loop 1604 East, Suite 250
San Antonio, Texas 78232
Attention: Mr. James E. Sigmon, President
Gentlemen:
We have acted as counsel for The Exploration Company, a Colorado
corporation (the "Company"), in connection with various legal matters relating
to the Registration Statement on Form S-8 to be filed by the Company with the
Securities and Exchange Commission (the "Commission") with respect to 400,000
shares of Common Stock, $.01 par value per share (the "Common Stock"), of the
Company which may be purchased pursuant to exercise of options or other stock
rights granted pursuant to the Company's 1995 Flexible Incentive Plan (the
"Plan"). We have examined such corporate records, certificates and other
documents and such questions of law as we have considered necessary or
appropriate for the purposes of this opinion and, on the basis of such
examination, advise you that in our opinion the 400,000 shares of Common Stock
to be issued to participants in the Plan will, when issued pursuant to the
terms of the Plan, be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. This consent is not to be construed as an admission
that we are a person whose consent is required to be filed with the
Registration Statement under the provisions of the Securities Act of 1933.
Very truly yours,
SMALL, CRAIG & WERKENTHIN, P. C.
/s/ M. Frank Russell
---------------------------------
M. Frank Russell
For the Firm
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated November 16, 1995,
included in The Exploration Company and Subsidiary Form 1O-K for the year ended
August 31, 1995, and to all references to our firm included in this
Registration Statement.
/s/ Akin, Doherty, Klein & Feuge, P.C.
- --------------------------------------
Akin, Doherty, Klein & Feuge, P.C.
San Antonio, Texas
November 4, 1996
